The government has tried to remove redundancies in the Income Tax Act-1961, under the Bill to be tabled next week. The language has been made simpler, to the extent feasible, and the presentation has been made user-friendly, Central Board of Direct Taxes (CBDT) Chairman Ravi Agarwal told Priyansh Verma in an interview. On the implementation of Pillar 1 and Pillar 2 rules aimed at streamlining of taxation of digital economy and deter tax avoidance by MNCs, Agarwal said that ultimately, India should get the fair share of tax revenue, which the country is not getting at the moment. “The relevant international organisations will deliberate on that and then see what happens. Some consensus may emerge out of the ongoing discussions,” he noted.
Q. There was an expectation of a concessional corporate tax rate of 15% or 18% for new manufacturing units being reintroduced in the Budget…
A. As on date, the tax rate stands at 22%, which is an optimal rate. There is no reason to bring it down to 15%. We have to balance the tax requirements. On one hand, there was a criticism that corporate tax was down, and now there’s an expectation to introduce a 15% rate. We’ve to take a balanced view.
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Q. What’s your view on adoption of OECD Pillar 1 and Pillar 2 rules? The US recently withdrew from these global tax deals…
A. Let things evolve. Some thoughts have been introduced to the system. The relevant international organizations will deliberate on that and then see what happens. Some consensus may emerge out of the ongoing discussions. It’s premature to comment right now. Ultimately, we should get a fair share of tax revenue, which we are not getting at the moment.
Q. Corporate tax collections in FY25 was cut by Rs 40,000 crore in revised estimate. For FY26, the projected growth is 10.4%; and for taxes on income, the forecast is 14.4%. Why are the estimates so conservative?
A. We are being realistic, not conservative. The growth in corporates’ revenues has been taken into account.
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